Mobile phone debt

 November 2016

Fact sheet no. 52 EW Mobile phone debt

Use this fact sheet to:

  • help work out which mobile contract is best for you;
  • work out how to reduce your mobile phone bill;
  • find out what to do if you are unable to pay your mobile phone bill; and
  • help you to dispute your mobile phone bill.

Which mobile contract is best for me?

Shopping for a mobile phone can be confusing. There are hundreds of tariffs to choose from and the hardest task can often be finding the right one for you. The best starting point is to think about what you will be using your phone for. Asking yourself the following questions may help.

  • Do you already have a mobile phone or do you need to buy one?
  • How many calls do you make in a month? It is best to work this out in minutes as a lot of plans give you options in minutes.
  • What types of calls do you make? Do you only call other mobile phones and landlines or do you call premium rate services?
  • How much mobile data do you normally use? Your mobile data allowance allows you to use the internet on your phone.
  • How many text messages do you send?
  • Look at past bills to help you work out what you normally use. Bill monitor can also help you to analyse your current usage and work out what allowances you will need. It is also worth thinking about the type of contract you would like to have. You have a choice of a monthly contract or pay as you go without a contract.

Pay monthly phones

Pay monthly contracts let you to pay for your mobile phone and its use over a fixed period (usually two years). The monthly cost usually includes an amount toward the cost of the phone itself and an allowance for your calls (in minutes), text messages and internet usage (called data). The following tips should help you to find the right mobile phone contract for you.

1. Set a budget

It’s important to work out how much you can afford to pay for your mobile phone each month. You should also think about whether you can afford to pay if the price of your contract goes up. Use our personal budget to help you. If the price of your contract does go up you may be able to cancel.

2. Check your allowances

Make sure you understand how many call minutes, texts and how much data you use. When shopping for a new contract, make sure that the allowances you agree to are enough for you. If you go over your monthly allowance on calls, text or data you will have to pay extra. The extra charges are often at a higher rate. This could mean a much bigger bill at the end of the month than you were expecting.

3. Think about the length of your contract

Pay monthly contracts can be lengthy and normally last between 18 and 24 months. Think carefully before agreeing to commit for so long. Some contracts are flexible and will allow you to change your allowances whilst others do not. Make sure that the contract you are being offered is the right one for you.

4. Check how much you are being charged for your mobile phone

If your contract includes a mobile phone check how much you are being charged for it. The cost of the phone is normally spread over the term of your contract (even if your mobile phone provider says it is free). This will affect how much you are paying every month. Think about whether you would be better off with a cheaper phone.

5. Decide what you want your phone to do

Think about the features that are important to you. Do you watch a lot of videos? If so you may want your phone to have an HD display. If you take a lot of photos you will need to think about the type of camera you will need on your phone. Screen size may also be important.

6. Consider a SIM only contract

SIM only contracts give you an allowance of call, texts and data without having to buy a new phone. These contracts are often cheaper and more flexible. The length of the contract can vary between 1 and 24 months. This type of contract can be useful if you don’t need to buy a new phone, or you are unsure what your phone usage is likely to be.

7. Check your credit rating

If you do decide to sign up for a pay monthly contract you will be subject to a credit check. If you have a poor credit score you could be turned down for a mobile phone contract. We have a fact sheet Credit reference agencies and credit reports that may help. If you are unable to get a pay monthly contract you will need to consider a pay as you go phone. The next section gives more information on this type of phone.

What is a mobile contract upgrade?

When your pay monthly contract comes to an end your mobile phone provider may allow you to upgrade. This could mean a change to your package of allowances and a new phone. Some mobile phone providers will allow you to upgrade before your contract ends. Before upgrading you should consider the tips we have outlined above.

Pay as you go mobile phones

Pay as you go (PAYG) mobile phones allow you to only pay for the calls, texts and data that you use. You will have to buy your mobile phone and sim card. Make sure you shop around for the best price. If you have a PAYG phone you will need to buy credit for (or top up) your phone regularly. Each time you top up your phone you will be given an allowance for calls, texts and internet usage (data). It is important that you keep on top of what you are using and spending. Lots of tariffs are available so it is best to shop around to get the right one for you.

How to reduce my mobile phone bill

It can be a shock when your bill comes in and it’s higher than you expected. If this happens regularly then you need to consider how you are using your phone. For some of us the costs of constantly high bills can become unmanageable. If you are worried about your mobile phone bills there are plenty of ways for you to try and save money.

Check your bill

Mobile phone providers don’t always get it right. Check your bill regularly to see if you have been charged the correct amount. If your bill is wrong you can raise a dispute with your mobile phone provider. See the later section Disputing a mobile phone debt.

Make good use of WiFi

You may be surprised at how much of what your phone does relies on an internet connection. Browsing Facebook or YouTube and sending emails will use some of your data allowance. If you’re not connected to WiFi, your phone will use your data allowance to access the internet. If you go over your allowance, you will get a higher bill. Most smartphones allow you to connect to WiFi instead of using your mobile data allowance.

​Our debt advisers say...

"My mobile phone remembers the WiFi passwords for all of my family and close friends. When I visit their houses I am automatically connected to their WiFi and don't use my data allowance..."

You can change the settings on your phone so it will try to connect to a WiFi source whenever one is available. Always ask the permission of the bill payer before connecting to a private WiFi source.

Most of the major mobile phone providers have access to WiFi hotspots. These allow you to connect to the internet in certain locations. Check with your mobile phone provider to see if this service is available to you.

There are lots of free mobile apps that allow you to make calls and send messages over the internet. BBC Webwise has lots of useful information about apps if you are unsure.

Most apps allow you to set up groups so you can speak or chat with several people at once. These apps tend to rely on the other person using the same app (for example Whatsapp and Skype). Find out which apps your friends and family members use and sign up.

Most of these apps also allow you to call abroad. If you make a lot of international calls this could be a big saving for you.

Check your contract

Are there extras such as voicemail that you don’t really need? You may also have some of your allowances set too high. Do you really need unlimited calls and texts? You may end up paying for calls and texts you don’t need. Some pay monthly contracts will allow you to make changes to your tariff before your contract ends. Check with your mobile phone provider.

Avoid in-app purchases

Some apps are free to download but will charge you to get extra services (for example, buying extra lives or features in games can be costly). You can turn off in-app purchases on most smartphones. Check with your phone manufacturer if you’re not sure how. In-app purchases may not be added to your mobile phone bill, instead you may pay for them through your bank account. This can make the overall cost of a smartphone add up to more than you planned or can afford.

Cap your bill

Your mobile phone provider may allow you to add a limit to how much you can spend on your bill. They will add a cap to your bill so it will never go over the amount you set with them.

Change the way you pay

Some mobile phone providers will offer a discount for paperless billing and paying by direct debit. Speak to your provider to see what discounts they are able to offer you.

Say no to premium rate numbers

Premium rate numbers are often charged at a much higher rate than a standard call. These types of numbers start with 0870, 0871, 0872, 0873, 0845, 070, 09 and 118. It’s best to avoid calling these numbers if you can. There are apps that can help you to find an alternative land line number. Money Saving Expert’s Say no to 0870 guide has some useful advice on cutting the cost of calling premium rate numbers.

Haggle

Haggling the cost of your contract upgrade can save you money. It’s definitely worth asking if they can lower the cost of your existing contract (and keep the same allowances). You can even ask them for a new phone at no extra cost. They don’t have to agree, and if they don’t you could always go elsewhere. If you do change mobile phone provider you can still keep the same mobile number. You will just need to ask your current mobile phone provider for your PAC code so the number can be transferred. Your mobile phone provider wants to keep you as a customer and if you don’t ask, you don’t get. The Which? website has a great guide for haggling mobile phone deals. It even tells you which providers are most likely to haggle.

I'm unable to pay my mobile phone bill

If you do miss a payment on your mobile phone bill your account will go into arrears. This could mean that your phone will be disconnected. You may be unable to make or receive calls. Your mobile provider can also cancel the contract and take steps to recover the money they are owed.

How to deal with mobile phone debt

1. Get free debt advice

The first step in dealing with mobile phone debt is to get some free debt advice. Our debt advisers can help you work out a payment plan for your mobile phone debt. They can advise you on the best way to negotiate a repayment with your mobile provider.

2. Complete a budget

Completing a personal budget​ will help you to work out whether you can afford to maintain the payments to your mobile phone and make an offer of payment towards the arrears.

3. Contact your mobile provider

If you are unable to pay your mobile bill you should contact your mobile provider. Complete a personal budget and ask them if you can pay in instalments. Your phone company may be more likely to agree to a monthly payment plan if you contact them quickly. If you need to keep your mobile phone connected your mobile phone bill should be treated as a priority debt. Your mobile phone provider can pass your debt on to a debt collection agency. Don’t worry. They don’t have any more powers than your mobile phone provider. You can still complete a personal budget and ask to pay in instalments.

4. Check to see if your tariff is affordable

A tariff is a contract that offers you a range of services for a fixed price. Your mobile provider may allow you to reduce your tariff. Read the section on How to reduce my mobile phone bill.

5. Pay what you can afford

Make sure that that you only offer what you can realistically afford. If you offer more than you can pay you are more at risk of missing a payment. This could mean that your phone will be disconnected and your contract cancelled.

Disputing a mobile phone debt

Before disputing your mobile phone bill, you should double check to see if the bill is correct. If you think the bill is wrong, pay the amount that you do not dispute. Write to your mobile provider and ask them to reduce the bill. In your letter you should outline the reasons for your dispute and supply copies of any evidence you may have.

If your mobile provider does not agree with your dispute you can make a formal complaint. Ask for a copy of their complaints procedure. Your formal complaint should usually be done in writing.

If your complaint has not been resolved within eight weeks you can complain to either  Ombudsman services: Communications or the Communications and Internet Services Adjudication Scheme. You can use Ofcom's ADR checker to see which organisation your mobile phone provider belongs to. They can tell your mobile phone provider to put matters right, remove charges, give an apology or tell them to pay for the trouble they have caused.